Wednesday, October 1, 2008

Do you NEED title insurance?

Do you NEED title insurance?

Short answer: YES.

Long answer: Let's explore what title insurance IS. It's basically an insurance policy that protects you (owner of property) or your lender against a loss from a problem or issue with the title to your property. If you are getting a mortgage on your property, you are also getting title insurance. All mortgage lenders require title insurance to insure them against any losses sustained if title problems arise.

But my attorney did a title search, so the title should be good, right?

WRONG. Your attorney may search the public records for your chain of title, but there are several issues that can occur outside of what the attorney can search in the public records. For instance, forgery or unrecorded easements and access rights. An attorney cannot determine from the face of the documents alone if a forgery or fraud in a signature has occurred.

My lender has title insurance so I don't need owner's protection.

WRONG. The lender's title insurance is just that. It protects the LENDER. If you have a large amount of equity in the property, owner's insurance is always a safe bet to protect you against any losses to your equity in the property.

How long is the policy good for?

The policy will last the entire time you own the property. You initially pay a one time fee when you purchase the property. The lender's insurance is usually purchased in an amount to cover the amount mortgaged, however, owner's title insurance is usually purchased in an amount to cover the purchase price of the property.

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